Archive for April, 2009

  • RIP: Geocities
    , April 23rd, 2009 at 3:10 pm

    Yahoo pulls the plug:

    Not with a bang, but with a whimper. Yahoo! is unceremoniously closing GeoCities, one of the original web-hosting services acquired by Yahoo! in 1999 for $2.87 billion. In a message on Yahoo!’s help site, the company said that it would be shuttering Geocities, a free web-hosting service, later this year and will not be accepting any new customers. Existing customers will still be able to access use GeoCities but Yahoo! is encouraging these customers to upgrade to Yahoo!’s paid Web Hosting service.
    GeoCities’ traffic has been falling over the past year. According to ComScore, GeoCities unique visitors in the U.S. fell 24 percent in March to 11.5 million unique visitors from 15.1 million in March of 2008. Back in October, 2006, it had 18.9 million uniques.
    There are plenty of other Website creation and hosting services out there, including blog platforms such as WordPress, Blogger, and Typepad, as well as Website creation and hosting services such as Ning, Webs, Jimdo, Snapages, Weebly, and countless more. GeoCities never really kept up with the times, but always remained a decent pageview generator.
    One of the pioneers of web-hosting sites, GeoCities gave users personal publishing tools and created “neighborhoods” within its web platform for users to be able to create pages, add a picture, text, a guest book and a website counter. Long before MySpace, Geocities was known as a place where teenagers, college students, and eventually others could impose their own garish taste upon the rest of the world. Here is one Geocities homepage we found from 1996: In honor of GeoCities and all that it has given the Web, whoever can come up with the worst GeoCities homepage design of all time will get a TechCrunch T-shirt.

    Personally, I think we should have given them several billion dollars in bailout money.

  • Is Oil to Blame?
    , April 23rd, 2009 at 10:27 am

    James Hamilton has a great post on the consequences of the oil shock (it’s three weeks old, unfortunately I just noticed recently). He concludes that the rise in oil prices led to the recession.

    The implication that almost all of the downturn of 2008 could be attributed to the oil shock is a stronger conclusion than emerged from any of the other models surveyed in my Brookings paper, and is a conclusion that I don’t fully believe myself. Unquestionably there were other very important shocks hitting the economy in 2007-08, first among which would be the problems in the housing sector. But housing had already been subtracting 0.94% from the average annual GDP growth rate over 2006:Q4-2007:Q3, when the economy did not appear to be in a recession. And housing subtracted only 0.89% over 2007:Q4-2008:Q3, when we now say that the economy was in recession. Something in addition to housing began to drag the economy down over the later period, and all the calculations in the paper support the conclusion that oil prices were an important factor in turning that slowdown into a recession.

    Of course the problems in the economy were building for a long time, and without an oil shock, they simply would have been put off and not fixed.

  • Best Line of the Day
    , April 23rd, 2009 at 10:22 am

    From a Nobel Prize Winner:

    So Citigroup is profitable because investors think it’s failing, while Morgan Stanley is losing money because investors think it will survive. I am not making this up.

  • The Worst Stock of the Decade
    , April 22nd, 2009 at 12:08 pm

    Congratulations to Velocity Express (VEXP), the single-worst performing stock of the decade…that’s still trading.
    Since the beginning of decade, VEXP has had three reverse stock splits; a 1-for-50, a 1-for-15 and a 1-for-5. That adds up to 1-for-3,750.
    VEXP closed last century at $8 a share but adjusting for splits that comes to $30,000. Today, it’s at 21 cents. Ouch! That’s a loss of 99.9993%. Heck, it’s more than Ivory Soap.
    Those -99.99…% figures can be a little deceiving so let me add some perspective. Velocity’s loss is the equivalent of dropping in half 17 times. It’s like a 10% loss every month for the decade. If would have turned $1 million into $7.
    But it’s still trading
    image797.png

  • Zimbabwe Fed Raided Private Accounts
    , April 22nd, 2009 at 10:52 am

    I’m no longer surprised by any news story out of Zimbabwe. Still, this is just crazy:

    Zimbabwe’s central bank governor admitted today that he took hard currency from the bank accounts of private businesses and foreign aid groups without permission, saying he was trying to keep his country’s cash-strapped ministries running.
    In a statement that would be unthinkable coming from most central banks, the governor of the Reserve Bank, Gideon Gono, appeared to be issuing a plea to keep his job in the face of growing criticism.
    Gono said it was time “to let bygones be bygones” now that Zimbabwe has a new coalition government dedicated to reversing its economic decline.
    The central banker said he gave the money he took from the hard currency accounts as loans to various ministries, and the private accounts would be reimbursed when the ministries repaid the loans. He said the bank’s efforts “sustained the country” in its hour of need.

  • Since March 9
    , April 22nd, 2009 at 3:00 am

    Guess whose Buy List is beating the market by more than 10% since March 9 — 35.88% to 25.65%.
    Give up?

  • More on the Distribution of Stock Returns
    , April 21st, 2009 at 2:45 pm

    Last week, I discussed the distribution of stock gains. I speculated that the fat tails is probably very significant. It hints that there may be “great stocks” whose returns make up an unusually large share of the market’s gains.
    I looked at the market’s gains this decade. Here’s the distribution of gains for over 3,500 stocks since December 31, 1999 (I used a log scale):
    image796.png
    The x-axis shows is the stocks ranked from worst to best (left to right). The y-axis is the log of the gain.
    The median stock is a loss of 20%. Over 57% of stocks are down for the decade. Even the stock at the 25th percentile is up about 70% which isn’t that great for a decade’s work.
    Just by eyeballing the chart, the appears to be major turn northward at around point 3400 which corresponds with a gain of over 500%.
    Here’s the raw data. I’d welcome if anyone could make a histogram based on standard deviation points. I strongly doubt that it’s symmetrical.
    Update: Don Fishback was good enough to bring his charting skillz to us. Check out his post. What strikes me is the leftward tilt of the distribution. Lots of underperformers. It’s like Wall Street is a reverse Lake Wobegon.
    Another Update: A reader provides a graph of returns by standard deviation. Notice how the peaked is to the right of 0.
    image798.png

  • Eaton Vance Takes a Hit
    , April 21st, 2009 at 12:22 am

    Shares of Eaton Vance (EV) got dinged today for over 11%. In this past weekend’s Barron’s, I noticed they ran a research piece from Sandler O’Neill saying that run in asset managers is overdone. That’s not really a big deal except that EV hasn’t been leading the market at all. The stock is up 70% since the market bottom in early March, but the stock was down a lot too.
    I can’t be sure if the Barron’s piece caused today’s selloff, but Sandler O’Neill also made it clear that they’re raising their earnings estimates for the quarter and fiscal year.

  • Memo to All CWS Employees
    , April 20th, 2009 at 2:26 pm

    To: CWS All
    From: Eddy
    Subject: Cost-Cutting Initiative
    Look folks, in case you haven’t noticed, we’re in the worst depression in 70 years. This means that all of us–you, me, my security detail–need to start cutting back on expenses. I’m ordering all department heads to cut their FY 2009 budgets by 0.0028%. I realize this will be painful and I want to thank everyone for their help.
    Read here for more details.

  • Citi Guys Slams Sysco
    , April 20th, 2009 at 1:12 pm

    In NY Mag, a Citigroup exec slams the unwashed masses:

    “No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague.

    Two things: First, saying “no offense but” is not an excuse to be offensive.
    Secondly, and for the record, you could have bought Sysco (SYY) 35 years ago for $21-1/8. Today, the stock is at $22.30.
    Oh, did I mention the splits totaling 144-for-1?
    Let’s just say that Citigroup hasn’t been as strong a performer.